2018 brought significant changes within the cannabis industry, both at a state and federal level through legislative, regulatory and judicial actions. Below is a recap of some of the most noteworthy occurrences in the Cannabis industry. Please note, the below is not an exhaustive list of all cannanbis relations actions in 2018; just a recap of some of the most noteworthy:
1. Cole Memo rescinded. Early in 2018 the Cole Memo was rescinded by then attorney General Jeff Sessions, directing U.S. Attorneys with the Department of Justice to utilize the same prosecutorial discretion that governs all federal prosecutions, taking into consideration all circumstances, the seriousness of the crime, the deterrent effects of prosecution and impact on communities. Ultimately, the rescission had little effect on state-regulated cannabis markets. If you want a refresher on the U.S. Attorney for Western Washington’s stance on Sessions’ actions, you can read this blog post by Avi Lipman of McNaul Ebel.
2. Certified Cannabis. ESSB 5131 which was approved by voters back in 2017 directed the WSDA to establish standards for the production of marijuana consisted with the U.S. Department of Agriculture’s National Organic Program (7CFR 205). Although the bill specifically prohibits use of the term “organic”, WSDA’s program, the WSDA provided a marijuana production standards rulemaking update in 2018 indicating that it is likely to utilize the term “Certified Cannabis” as part of its rule-making terminology. A CR-102 was expected by fall of 2018, but as of yet the WSDA is still in the CR 101 phase. Orion Inskip of Gleam Law provided an update of the process through this blog post.
3. Changes to the approved edibles list. In October 2018 the WSLCB issued a new policy that disallowed certain already approved edibles that it considered especially appealing to children. Under the new policy, all hard candies and tarts, fruit chews, jellies and of gummy type products would not be approved as of January 1, 2019. However, after receiving industry input, the WSLCB amended its policy that categorically banned certain types of edibles and instead decided to limit colors and shapes of edible products and their packaging. Sam Mendes of Cultiva Law discusses the new policy in more detail here.
4. 2018 Farm Bill. A discussion of 2018 developments would not be complete without reference to the 2018 Farm Bill, which was signed into law last month and which legalizes industrial hemp (defined as all parts of the Cannabis sativa L. plant with a THC content below .3% on a dry weight basis) and products derived therefrom (i.e. CBD). Daniel Shortt of Harris Bricken discusses the potential ramifications of this bill via the CannaLaw Blog, including the current barriers posed by the FDA regarding sale of CBD infused products designed for consumption. The FDA’s Marijuana FAQ Page explains its position on CBDs.
5. Case law. Several relevant rulings were issued throughout the year, two of which are on hot topics right now – Trademarks, and CBDs.
The Washington Court of Appeals decided that out of state cannabis businesses can establish trademark rights in Washington through licensing agreements, which are sufficient to meet the ‘use in commerce’ test but such use does not constitute doing business in Washington which would require a state issued cannabis license. John Crosetto and Victoria Wei of Garvey Schubert Barer post a more thorough synopsis of the case and its outcome on the Cannabis Law Blog.
A USPS administrative law judge determined that CBD manufactured from industrial hemp is lawful to mail. Daniel Shortt of Harris Bricken summarizes the case on the Canna Law Blog. Alternatively, a similar administrative decision determined that CBD manufactured from marijuana (i.e. from a Cannabis sativa L. plant whose dry weight measurement of THC is .3% or greater) is federally illegal and thus not legal to mail. The administrative decision can be read on the USPS site.
6. Legalization Advancements. 2018 saw several significant advancements in cannabis legalizations. Unless you've been hiding under a rock, you know that Canada legalized cannabis production, sale, and consumption on a national level, which created some interesting outcomes regarding border control. Neil Juneja of Gleam Law wrote an interesting piece prior to the start of retail sales that speculated as to whether Canadians would be blacklisted and denied entry to the United States for their legal cannabis use. Although some Canadians have been denied entry when their travel to the United States is forcannabis-related purposes (even trade shows and symposiums), Customs and Border Patrol have released a statement indicating that Canadians coming to the United States for reasons unrelated to cannabis will be generally be permitted into the country.
Also in 2018 several states enacted a regulatory scheme for legal cannabis production, distribution and possession. Voters in Utah and Missouri approved ballot measures to legalize medical marijuana; while a Michigan bill to incorporate recreational uses into its medical cannabis framework passed the legislature. However, a proposal in North Dakota to legalize medical marijuana was rejected. Vince Sliwoski of Harris Bricken posted an update on the Canna Law Blog of cannabis achievements during the 2018 midterm elections.
In retrospect, 2018 was a significant year for cannabis legalization, and we can expect to see several positive actions over the next twelve months. According to Barry A. Abbot of Lane Powell’s Cannabis Practice Group, we are likely to see the banks re-evaluate their willingness to bank and lend in at least the hemp industry in response to the 2018 Farm Bill; and it is possible that such re-evaluation may ultimately trickle down to the marijuana industry, in large part due to the 2018 Farm Bill. Further, the ACLU stated in a blog post that New York is likely to be the next state to legalize recreational cannabis. We hope to see these advancements and a whole lot more in 2019.